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Labor Market Effects of the Minimum Wage: Evidence from Russian Regional Data

Student: Iurchenko Daniil

Supervisor: Alexander Muravyev

Faculty: St.Petersburg School of Economics and Management

Educational Programme: Economics (Bachelor)

Year of Graduation: 2019

Following the 2007 decentralization of minimum wages, Russia experienced a significant change in minimum wages across regions and over time. In this paper, we examine the effect of minimum wages on employment, hours worked and informal employment using Russian regional data. Our sample covers 83 regions on a quarterly basis from 2010 to 2017. We build our identification strategy on the two-way fixed effects model with individual-level and regional-level controls. Additionally, we correct for the endogeneity of minimum wage policies by accounting for heterogeneous employment trends among regions. We find that that minimum wages negatively affect the employment of young adults with the employment elasticity of -0.07. The estimates further increase in magnitude when we consider the private sector employment or focus on unexpected minimum wage changes. In contrast, we do not find any substantial effects on hours worked and informal employment, although some specifications suggest a modest decrease in hours worked.

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